After weeks of bouncing around in the $6,000 to $6,600 range, BTC broke out to as high as $7,000 on Wednesday morning to the surprise of many investors. Oddly enough, many analysts and industry leaders were able to pinpoint a single catalyst for this bout of positive price action.
Bitcoin Shows Signs Of Strength, But Will It Last?
On Sunday, BitMEX announced that it would be performing scheduled maintenance on its trading engine, which would result in a short period of downtime on Wednesday morning (GMT). While this announcement may sound mundane on the surface, many drew attention to BitMEX’s role as a primary medium for traders to speculate on prices, coupled with the influence the platform has on the market. Elaborating, these users noted that the exchange’s downtime, albeit ever so short, could result in a temporary burst of abnormal price action.
Scheduled Performance Upgrade on Weds, August 22 at 01:00 UTC: https://t.co/87NuN6P4j9 – Please note this downtime is on Tuesday night in the Western Hemisphere and Wednesday morning in the Eastern.
— BitMEX (@BitMEXdotcom) August 20, 2018
Right on schedule, BitMEX users were automatically signed out as the exchange’s trading systems went offline on August 22nd at 1:00 UTC. Down to a tee, as BitMEX’s trading ground to a halt, Bitcoin saw a surge of buying volume, rising from $6,450 to $6,720 within a minute. In the minutes that followed, BTC continued upwards, temporarily peaking at $6,900 as the weight of shorts were alleviated off the shoulders of the crypto market.
Altcoins followed, posting near-identical gains in terms of percentage, including Ethereum, which temporarily broke over the $300 line of support for the first time in weeks. While some expected a post-maintenance influx, what occurred next shocked a few investors. As BitMEX’s maintenance cycle drew to a close, one-hour after it started, the market started to show signs of relative weakness.
Some saw this weakness as a sign that the market would return to pre-maintenance levels, but as BitMEX reopened its doors to traders, buy orders quickly propped up the spot price of BTC on the exchange. Soon enough, Bitcoin was trading at over $7,000 on BitMEX, in a likely correlation with the tens of millions of dollars worth of short positions biting the dust. And since then, crypto prices across the board have found stability at an average of 4% daily gains, adding $10 billion to the total market capitalization of all crypto assets.
Although this move marked Bitcoin’s first foray above $6,600 in weeks, some were skeptical that this wouldn’t last for long. Alex Kruger, an Argentinian crypto-focused market commentator and analyst, noted that this move may actually be a “loss” for long-term crypto believers.
The Bitmex Maintenance Pump represents a big win for short-term longs yet a loss for investors.
— Alex Krüger (@Crypto_Macro) August 22, 2018
While not explicitly stated, this statement implies that this price jump, or “pump” as he calls it, was rather an act of manipulation rather than a bona fide bullish move. But to some, a price surge achieved through any means can be seen as something positive.
At the time of writing, Bitcoin has found a place to stand at $6,690, with investors keeping their eyes peeled on where the price of the asset will move next.
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